While there were murmurs of a beauty bubble going into 2018, it looks like it’s going to be a record-breaking year for Beauty M&A. As of July 2018, PitchBook Platform has tracked investors pouring about $464 million into start-ups in the beauty space, which was already more than any other year in the last decade. PitchBook projects deal count is on pace to surpass the total from nearly every other year.

According to WWD, over the past year, private equity has been paying some of the highest multiples in beauty: three times annual sales, compared with global giants, which are prepared to pay four times sales. By comparison, international trade buyers have paid out 4.3 times, and domestic trade 1.5 times sales. While valuations are high and competition is fierce, there are opportunities for those willing to go small and take a longer-term view.

There was activity across sectors, but with the exception of the billion-dollar evaluation of the Eurozeo investment in the Pat McGrath Labs business, Q3 was uneventful in terms of transaction size. Large traditional beauty players are still looking for indie brands for growth and innovation, but they are no longer only relying on acquisitions. Some strategics like Unilever are incubating “indie”-like brands internally, while others are making investments in funds and incubators that focus on start-ups. This quarter saw Shiseido invest in actor Will Smith’s Dreamer Fund, the L’Occitane Group has launched an incubator called Obratori, and L’Oréal has invested in Partech Africa.

The full Beauty Deals M&A Transactions Q3 2018 is available for download.